By Charles Araujo
It was a fairly routine appeal—a capital budget request to upgrade the organization’s WAN acceleration technology. The cost was estimated to be seven figures. But something about the request struck Michael Keithley, CIO of entertainment industry giant CAA, as wrong; he couldn’t quite put his finger on it, but he felt this budget request needed more investigation. So he asked a question: What was this investment’s business value?
After some time crunching numbers, his team came back with an ROI study, demonstrating how the investment would create some kind of a return. Keithley, however, wasn’t satisfied. It seemed too abstract. “Which of our customers are complaining that our WAN is too slow?” he asked. “None of them,” he was told, “but our WAN acceleration technology is getting old and we need to be proactive.” That’s part of life for an IT executive—you have to maintain the technology you have—but the question was still gnawing away at him. “If no one was complaining, was this a good investment?”
“I want you to try something,” Keithley instructed his team. “I’d like you to turn off our existing WAN acceleration technology for our New York office.” His team must have thought he was crazy. “Let’s see who complains.”
No one complained. In fact, no one seemed to notice at all.
Keithley asked his team to turn off WAN acceleration, office by office, across the entire network. No one complained. As it turned out, the WAN technology that they were about to replace because it was getting too old, wasn’t needed any longer. At some point, it was probably a critical piece of their solution. But like many things that simply become part of the “assumed necessity,” the WAN acceleration technology was maintained without anyone asking if it still provided business value to the organization. Rather than a seven-figure investment, the company ended up de-installing an entire suite of unneeded technology, reducing its complexity and freeing up precious capital for other investments.
It was a triumph of how an IT organization is supposed to work. It was a testament to Keithley’s management style. And it delivered significant business value in terms of the cost savings but, more importantly, in the form of the innovative initiatives that those dollars later funded.
But this triumph did not start with this episode. It had begun years before when Michael Keithley first started at CAA. This triumph was just the latest realization of an investment made years ago.
Creating Business Value
If you have followed my writing, you know that “business value” may be my favorite phrase. I use the term “value” about 70 times in my book The Quantum Age of IT: Why Everything You Know About IT is About to Change. I think that the understanding of business value and how IT contributes to it is the key to unlocking IT’s continued relevance in the new era of IT organizations.
But what exactly is business value, and how can an IT organization create it?
I think Michael Keithley’s story can help us understand the answer to this question. What makes the concept of business value difficult to understand is that it is not simple and consistent. It is different for every company because it is intimately tied to the organization’s mission, vision and strategy. Business value is anything that helps the organization execute its strategy, realize its vision and fulfill its mission. But those are often communicated and measured in terms that IT rarely uses, such as “return on shareholder value,” “first or second in every market” and “customer experience.”
To contribute to business value, the IT organization has to be on the inside. IT leaders and managers have to understand the organization’s mission, vision and strategies. They must possess an intimate understanding of how IT can affect them and how they play into the bigger picture. And all of that starts with one thing: trust.